INTEREST RATE MARKET FUTURES
Global bond yields were mostly lower recently due to concerns that high interest rates could hurt the global economy.
The September 30-year Treasury bond futures are trading at a one-month high today.
The Treasury will auction two-year notes.
Financial futures markets are predicting there is a 74% probability that the Federal Open Market Committee will hike its fed funds rate by 25 basis points at the July 26 meeting, and there is a 26% chance that the fed funds rate will remain unchanged.
Federal Reserve officials are indicating there will be two more fed funds rate hikes this year. However, financial futures markets pricing suggests the FOMC can only increase rates one more time in 2023.
Most major central banks remain hawkish despite growing evidence of a slowing global economy.
STOCK INDEX FUTURES
Stock index futures were lower in the overnight trade as concerns about the effects of further monetary tightening remain. In addition, traders are cautious ahead of the Bank Stress Test results due this week.
The 9:30 central time June Dallas Federal Reserve manufacturing index is expected to be -26.5.
Federal Reserve Chair Powell will speak on Wednesday morning. Expect a sideways trade in advance of Powell ‘s speech and higher prices after his speech is out of the way.
CURRENCY FUTURES
The U.S. dollar index is lower.
The euro currency is higher despite news that business sentiment in Germany worsened in June for the second month in a row.
The Ifo business-climate index declined to 88.5 in June from 91.5 in May, missing expectations of 90.5.
The index assessing the expectations for the next six months fell to 83.6 in June from 88.3 in May. The indicator gauging current business conditions declined to 93.7 from 94.8.
The Ifo index is based on a poll of approximately 9,000 companies in manufacturing, services, trade and construction.
The Confederation of British Industry’s monthly distributive trades index improved slightly to -9 in June from -10 in May, pointing to a second monthly decline in trade.
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